For companies with multiple staff members, workers compensation insurance is a practical safeguard that benefits employees and employers alike. Yet many business owners aren’t sure what this coverage includes, whether they need it, or why they might invest in it.

Let’s explore how workers compensation coverage can support your team, your reputation as an employer, and your bottom line.

What is workers compensation insurance?

Workers compensation coverage, often referred to as “workers comp,” is a type of insurance policy taken out by an employer to cover costs related to employee injuries on the job.

Depending on the nature and severity of the injury, these expenses may include medical care, lost wages and rehabilitation. This kind of policy can also reduce the employer’s risk of legal liability related to workplace injuries.

Workers compensation laws vary by state, and not all employers are required to carry coverage. However, it’s important to know that employers without workers compensation coverage can still face financial liability for employee injury claims. To learn about the requirements where you live, visit your state’s workers compensation website.¹

That said, businesses that want to sign contracts with certain companies and government agencies may be required to provide proof of workers compensation coverage.

Yet there’s more to consider about this type of business insurance than whether it’s mandatory.

How might workers compensation insurance benefit your employees?

A well-designed workers compensation policy may help reduce stress and hardship for your employees if they’re injured on the job. It helps address a claimant’s medical bills, covers a portion of their lost wages while they recover, and may provide access to rehabilitation services and return-to-work programs.

Workers compensation can also contribute to a healthier overall workplace environment by reinforcing a culture of safety and employee trust. Over time and with consistency, having a workers compensation policy in place can help build confidence in your workforce, letting them know they are valued and cared for.

Six more ways workers compensation insurance may protect your business

As you can see, workers compensation does more than protect your employees. It may also help you:

1. Reduce the risk of lawsuits by employees seeking to recover medical costs and lost wages
2. Help manage the potential financial impact workplace injuries can have on your business
3. Support compliance by addressing relevant state labor laws and customer or contract requirements
4. Lessen the risk of business disruption by handling employee claims efficiently
5. Build professional credibility with your partners, vendors and customers
6. Enhance your employer brand — or your company’s reputation as a desirable place to work, especially if your organization also maintains good workplace safety measures

Common misconceptions about workers compensation coverage

Some business owners unwittingly put their revenue and their employees’ wages at risk because of popular myths about workers compensation, such as:

“It’s only for dangerous jobs.”
Any employee can have an injury on the job, even if they work at a desk all day.

“My business is too small to need it.”
Any business with employees is at risk for liability in the case of an employment-related injury on the job.

“It’s too expensive.”
It may prove more affordable to have the predictable expense of a regular workers compensation premium than to pay a hefty, out-of-pocket sum if your business were to lose a lawsuit regarding employee injury claims.

What to look for in a workers compensation policy

The best workers compensation policies don’t just cover the basics. They can also make it easier for employees with claims to access the support they need, and they help employers manage costs and claim-related risks through education and incentives.

As you research and compare workers compensation options for your business, take note of each policy’s coverage and limits.

What’s included in the plan? Ideally, the policy will cover an injured employee’s medical expenses, along with their lost wages during treatment and recovery. The policy should also offer death benefits to an employee’s beneficiaries in case of a fatal work accident.

Just as important as what’s covered is the amount of coverage. You’ll want a policy that’s in line with health care and other costs in your area, as well as comparable to your employees’ pay ranges.

Check out reviews and feedback on each insurer’s quality of service, especially claims processing and support. If you’re paying for a policy to take care of your employees, you may also want to ensure your staff members have a reasonable amount of time to obtain and pay for the care they may need.

Look for safety program² discount options, too. Insurers who offer these discounts are giving your business a way to improve employee safety while helping reduce costs.

Finally, find the best policy for your company by partnering with a licensed insurance agent who understands your industry and relevant state workers compensation regulations. If you have employees scattered across multiple states or international locations, this step is especially important.

The takeaway

In many cases, workers compensation insurance is more than a legal requirement. It’s a smart risk management tool for forward-thinking business owners who know the value of their team and their reputation as an employer of choice. Working with a licensed insurance agent can help your business find the right policy to protect that value.

RBFCU Insurance Agency is here to help business owners and leaders get the right commercial coverage at the right price. Call or request a quote online today.